FOREX-Dollar retreats from 2018 high; seen as temporary pause

5 Min Read

* Traders move past U.S. exit from Iran nuclear deal
* Euro rebounds from 2018 low
* Higher U.S. yields limit dollar pullback
* Swedish crown surges even as inflation decelerates
(Updates market action, changes dateline, previous LONDON)
By Richard Leong
NEW YORK, May 9 (Reuters) - The dollar fell on Wednesday
from its strongest levels in 2018 against a basket of currencies
due to mild profit-taking, but is expected to resume its rise
due to solid U.S. economic growth and more interest rate
increases from the Federal Reserve.
The weaker greenback stemmed from a bounce in the euro,
which hit a fresh year-to-date low in earlier trading.
"There's a little exhaustion with the long-dollar trade, but
I don't think we've reached the end of it yet," said Ilya
Gofshteyn, FX and global macro strategist at Standard Chartered
Bank in New York.
Concerns about the U.S. exit from an international nuclear
deal with Iran had also supported the dollar in early Asian
trading. For now, traders put the issue on the backburner until
there is a further development, analysts said.
"The market has kind of moved past this," said Boris
Schlossberg, managing director of FX strategy at BK Asset
Management in New York.
At 9:47 a.m. (1347 GMT), the index that tracks the dollar
against six currencies slipped 0.17 percent to 92.946
after touching a 2018 peak of 93.416 earlier.
The three-week long rally for the U.S. currency, in which it
has reversed several months of weakness, has caused the
unwinding of popular long bets on emerging market and G10
currencies.
The euro hit a year-to-date low of 1.1821 earlier on
Wednesday before reversing course to $1.1875, for a 0.1 percent
gain on the day, according to Reuters data.
The dollar climbed 0.6 percent to 109.74 yen and
edged up 0.07 percent to 1.0021 Swiss franc as worries
about U.S. President Donald Trump's decision to pull the United
States out of the Iran nuclear deal faded somewhat.
The dollar's pullback was moderated by higher U.S. yields
underpinned by expectations of rising U.S. inflation and a
swelling U.S. budget deficit.
Low inflation remains a concern for major central banks.
On Wednesday, the U.S. government's producer price index
grew by a slim 0.1 percent in April, less than what analysts had
expected.
Swedish inflation edged down to 1.9 percent on a
year-over-year basis last month, just below the Riksbank's 2
percent goal.
Nevertheless, the Swedish crown, one of the worst performing
G10 currencies in 2018, rallied in the wake of the softer
inflation reading. It jumped 1.4 percent versus the dollar
and 1.3 percent against the euro.
"Even though the inflation prints matched consensus and
matched the Riksbank’s expectations and decelerated, markets had
been concerned about further downside," ScotiaBank analysts
wrote in a research note.
========================================================
Currency bid prices at 9:52AM (1352 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar EUR= $1.1878 $1.1862 +0.13% -0.98% +1.1897 +1.1823
Dollar/Yen JPY= 109.7900 109.1100 +0.62% -2.56% +109.8300 +109.0000
Euro/Yen EURJPY= 130.41 129.46 +0.73% -3.53% +130.4800 +129.3600
Dollar/Swiss CHF= 1.0026 1.0014 +0.12% +2.90% +1.0043 +1.0004
Sterling/Dollar GBP= 1.3583 1.3544 +0.29% +0.53% +1.3606 +1.3500
Dollar/Canadian CAD= 1.2884 1.2948 -0.49% +2.44% +1.2974 +1.2870
Australian/Doll AUD= 0.7456 0.7450 +0.08% -4.42% +0.7465 +0.7413
ar
Euro/Swiss EURCHF= 1.1914 1.1883 +0.26% +1.92% +1.1919 +1.1867
Euro/Sterling EURGBP= 0.8744 0.8757 -0.15% -1.56% +0.8767 +0.8733
NZ Dollar/Dolar NZD= 0.6983 0.6969 +0.20% -1.45% +0.6995 +0.6950
Dollar/Norway NOK= 8.0492 8.1389 -1.10% -1.92% +8.1625 +8.0516
Euro/Norway EURNOK= 9.5644 9.6549 -0.94% -2.89% +9.6641 +9.5662
Dollar/Sweden SEK= 8.6875 8.8172 -1.38% +5.92% +8.8591 +8.6861
Euro/Sweden EURSEK= 10.3180 10.4627 -1.38% +4.87% +10.4788 +10.3207
(Additional reporting by Tommy Wilkes in LONDON, Shinichi
Saoshiro in TOYKO; Graphics by Saikat Chatterjee and Ritvik
Carvalho;
Editing by Jon Boyle and Paul Simao)